Lynas Rare Earths building inventory as prices slump

Lynas Rare Earths says it has returned to holding back production from the market in the face of falling prices for key rare earth oxides.

Lynas Rare Earths says it has returned to holding back production from the market in the face of falling prices for key rare earth oxides, as the company’s revenue slumped in the June quarter.

The market fall came as Lynas’s Malaysian refinery finally hit its stride after a troubled year affected by water shortages and other issues.

Lynas produced a record 1864 tonnes of neodymium and praseodymium (NdPr) in the quarter, up from 1725 in the March period, and a total of 4475 tonnes of rare earth oxides.

But the record output came amid a pricing slump that saw the average price of a basket of its oxides fetch 19 per cent less than the March quarter, at $38.90 per kilogram – and was less than half the $79.20/kg for the same period in 2022.

Lynas said it had begun holding back finished stock on the low pricing, blaming the price slump on falling demand for NdPr – used in high intensity magnets – in Japan in particular.

The company sold 4050 tonnes of rare earth oxides in the June quarter, down from 4914 tonnes in the March period – although 9 per cent above levels from a year ago.

It booked sales revenue of $157.7m for the period, down from $237.m in the June quarter, and 46 per cent below the June quarter in 2022.

Lynas said pricing trends would depend on China’s economic recovery, as well as production quotas in the country’s own rare earths industry, now largely under the control of state-backed companies.

Lynas chief executive Amanda Lacaze said the company would return to stockpiling inventory rather than selling it into cooling markets, as it waited for demand for pick up.

She said Lynas was also holding stock ahead of the start up of its cracking and leaching plant in Kalgoorlie in WA – facing further delays, with first production now pushed back another month to September.

Lynas pulled the trigger on the development of the Kalgoorlie cracking and leaching plant in 2020, and the company had hoped to have the facility fully commissioned and supplying its Malaysian refinery by the end of the 2022 financial year.

Lynas has until January to get its Kalgoorlie plant into production, as its Malaysian equivalent faces closure at the end of December unless the company wins an extension of its operating licence from the government, or through the courts.

“We have secured supply to our key customers and, in the coming months, given low market pricing, we will hold additional inventory,” Ms Lacaze said.

Demand for NdPr, used in magnets for EVs and wind turbines, is set to double by 2030.

Lynas shares closed up 17c to $6.73 on Monday.